CHICAGO– As consumers continue to await interest rate relief in the form of the rate cuts many analysts are predicting for September, credit products continue to serve to bridge the financial gaps that may exist in many household budgets, according to the new Q2 2024 Quarterly Credit Industry Insights Report (CIIR) from TransUnion.
Key Findings
Among the key findings:
-
Unsecured personal loan balance growth continued in Q2 2024, albeit at a more moderated pace.
“While it was the seventh consecutive quarter of balance growth, YoY growth was only 6%, down from the double-digit growth seen at its peak,” TransUnion stated. - Originations saw YoY growth for the first time in five quarters in Q1 2024 (the most recent quarter for which originations data are available). Growth was led by super prime and near prime, at 12% and 10% YoY growth respectively, and all risk tiers except prime plus seeing growth.
- Bank card balances grew 4.8% YoY led by subprime at 12.3% growth. According to TransUnion, all risk tiers saw growth YoY. Card originations were down 7% YoY in Q1 2024. However, super prime saw growth YoY.
- TransUnion said “it’s a similar story with auto, with originations down YoY in Q1 2024, with the exception of super prime.” Among the super prime risk tier, originations were up 10.3% YoY in Q1 2024. Balances grew 2.7% YoY, primarily behind growth among the subprime (9.8%) and super prime (7.9%) risk tiers.
- Mortgage originations saw YoY growth in Q1 2024, which represents the first YoY growth since 2021. “The growth was headlined by growth on both ends of the credit risk spectrum, with subprime up 15.7% YoY and super prime up 12.1% over that time,” TransUnion reported.
‘Going to Have to Wait’
“Consumers across the board continue to engage with a wide range of credit products, with continued balance growth across credit risk tiers. Lower risk super prime, in particular, originated more this quarter in areas such as credit cards and auto,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Of course, on the origination front, this doesn’t mean prime and below consumers don’t also have access to new credit in these areas. However, they are going to have to wait for lower interest rates and for their monthly payments to come down.”
For additional information, go here.